China merger filings are increasing rapidly with China’s Ministry of Commerce (MOFCOM) receiving 866 merger review filings (as of 31 December 2013) since the Anti-Monopoly Law took effect on 1 August 2008. In 2013 alone, MOFCOM received 224 filings relating to industrial concentration – this is up 8% from 2012. Of those received, MOFCOM reviewed 212 (up 12.8% from 2012) – resolving 207 (up 26% from 2012) and conditionally approving 4.
These numbers are not so different from the ACCC’s – in the financial year 2012/2013, the ACCC received 289 informal merger clearance applications (dropping 15% from the financial year 2011/2012). However, while the base numbers may be the same, the contrast as against GDP is remarkable given that the Chinese economy is more than 5 times the size of Australia’s.
In addition, it is important to note the significant differences in the process of review:
- In Australia, notification is not mandatory and merger parties can seek informal clearance (a non-statutory review process) or formal clearance by the ACCC or apply to the Australian Competition Tribunal for authorisation. Even with the informal clearance process, the ACCC doesn’t review every informal clearance application received in great detail, as sometimes a simple assessment is all that is required. Of the 289 received, only 76 were reviewed (213 were assessed) – 55 were cleared, 6 cleared with undertakings and 6 were publicly opposed. No use has been made of the formal clearance process.
- In China, there is currently only one compulsory merger review process, which all mergers subject to if the transaction meets the requisite thresholds.
In order to simplify the review process, MOFCOM has adopted new guidelines setting out substantive criteria for identifying “simple cases” that could qualify for a less detailed review. While the procedural rules are yet to be released, the guidelines should assist parties in determining the degree of focus their case may receive. Read more about the guidelines and their impact in a client alert by Sharon Henrick, Susan Ning and Hazel Yin on ourwebsite.
In Australia, the root and branch review of Australian competition laws may also see a revamping of the formal merger process (blogged about here) or the procedures for authorisation by the Tribunal, so watch this space.